Free Dining is free.
You make a package at full cost with tickets, it costs $x. You add the dining plan to that, it costs $y more dollars.
You make a package under the free dining plan promotion, it costs $x. You remove the dining plan from it, it costs $x (and technically, wouldn't be under the promotion any more)
Something that people don't seem to understand is that we use the term "Free Dining" as shorthand for the "Free Dining Plan promotion". Simply because it's easier to say and type.
Now, is free dining (aka FDPP or Free Dining Plan Promotion)
always the best offer? No. It depends on the situation, resort level, party makeup and size, and such. Even when planning to add on a dining plan, smaller parties at higher levels of resort (due to the combination of higher baseline prices for the rooms and the larger percentages off) typically make out better with a room discount and then paying for the plan.
As an example, this year we had 15% off or free QSDP at a value, and 25% off or free
DDP at a deluxe.
If my value room cost me $82 per night, 15% off would save me $12.30 per night, total, for an entire party. Even someone going solo would be "saving" ~$35 per night using the QSDP offer. Which means that, so long as I spend over $16.50 per night on food that is covered by the plan (thus, getting it for free), I am coming out ahead on the QSDP offer. That's basically 1 meal. If I bring my friend and her little on on the trip, QSDP would then cost us (as a party) ~$82 per night ($35x2 + $12). Again, we'd still, as a party, need to spend $12.30 on covered items to make up the difference. I don't think anyone can feed 2 adults and a 5 year old on less than $12.30 a day (well, night) at Disney without bringing all their own food (and even then, it may be pushing it, since you DO have to purchase the food at some point...)
Now, on the flip side of this, we have the same group staying at WL with a 25% discount. A basic room rate of $265 per night and a discount of 25% saves me ~$66.25 per night. With the DDP costing $53 per night, you can see how my solo portion of the trip is better off with a room discount even if I decide to purchase the DDP. The 2nd portion is up in the air. DDP would look better at first, since it would be saving ~$119 per night (53x2 + 13), but we'd have to eat ~$66.25 worth of food to make up the difference. Unlike the Value example, eating for 3 at Disney on $66 per night is doable and we'd have to analyze to see if the DDP was right for us.
Now, shifting up the cost of the room, would shift up the value of the room discount. Since values shift up to about $107 for Fri-Sat, this is still right around $16 and a pretty tiny discount. WL shifts more to $285 per night (Fri-Sat) for the same room, knocking that discount up to ~$71 per night, making the choice more obvious for the solo, and more difficult for the party of 3.
But, saying that it's not free because you're paying rack rate, is like saying a room discount isn't a discount because you're paying full price on food. They're both discounts on the total package (used in the general sense, not the Disney sense), ideally we'd each individually use what's best for us.
Sorry, it irks me when people say that it's not free because you pass up a room discount... they are BOTH discounts of some sort and they work for two different subsets of people...just because you don't fit into one box, doesn't mean that box isn't as good or isn't really even a box
On a different note, think I can get away with blaming room discounts for resorts falling out of shape? Since they blame the free dining promotions for ruining Disney dining? Hmm...